The North East saw a surge in take-up of industrial space in the first half of 2014, a report by Knight Frank has revealed.
A total of 1.28m sq ft of logistics and industrial space was taken up in the first six months – double the figure recorded in the last half of 2013 and 72% above the five-year biannual average.
Simon Haggie, partner, industrial agency at Knight Frank says the activity at the start of this year reflected the strong, pent-up demand that was evident at the end of 2013.
Haggie revealed a new tenant will soon be taking over a former pharmaceutical plant in Peterlee.
Bristol Laboratories, a £78m turnover firm which is engaged in the development, manufacture, marketing and distribution of medicines and formulation brands, is poised to set up a North East base.
Haggie said: “The first half figures were boosted by Hitachi Rail Europe commencing construction of its new 460,000 sq ft rail plant at Merchant Park, Newton Aycliffe, with completion expected in late 2015.”
“The largest deal so far this year for existing space was the sale of the 188,000 sq ft Reckitt Benckiser pharmaceutical plant in Peterlee, County Durham to Luton-based Bristol Laboratories. This was completed on confidential terms.”
In the sector occupier confidence has certainly improved in the North East, although companies remain both cautious and cost conscious in their property strategies.
Export market demand for products manufactured in the North East is strong, maintaining its position as the UK’s only net exporting regions. Nissan continues to expand and invest, with a record half a million cars built in its Sunderland plant in 2013, driving property demand across the supply chain in the Tyne and Wear.
“As a result the availability of new and modern stock is becoming increasingly scarce,” said Haggie. “The anticipated pipeline of new schemes is proving slow to come forward, with only two small starter-unit schemes of currently on site in the region.
“Developer confidence in speculative build remains fragile, while the anticipated appetite for bespoke pre-lets is yet to materialise.
“There is little indication that developers are willing to bring forward speculative development in the region, meaning new development is only likely to come forward via design and build agreements.”